EXHIBIT 1.1
2,700,000 SHARES OF COMMON STOCK
XXXXXXXXX.XXX INC.
UNDERWRITING AGREEMENT
, 1997
Hampshire Securities Corporation
000 Xxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
On behalf of itself and the other
several Underwriters named in
Schedule I attached hereto
Gentlemen:
The undersigned, Xxxxxxxxx.xxx Inc., a corporation organized and
existing under the laws of the State of Delaware (the "Company"), hereby
confirms its agreement with Hampshire Securities Corporation (individually,
"Hampshire," and, as representative (the "Representative") of the several
underwriters named in Schedule I hereto (the "Underwriters")), and the
Underwriters as follows:
1. INTRODUCTION.
(a) The Company proposes to issue and sell to the Underwriters an
aggregate of 2,700,000 shares of common stock, par value $0.001 per share, of
the Company (the "Common Stock"). Such 2,700,000 shares of Common Stock are
hereinafter referred to as the "Firm Stock."
(b) Solely for the purpose of covering over-allotments, if any, the
Company proposes to grant to the Underwriters an option (the "Over-allotment
Option") to purchase 405,000 shares of Common Stock. Such shares of Common
Stock are hereinafter referred to as the "Additional Stock." The Firm Stock and
the Additional Stock are hereinafter referred to collectively as the "Stock."
(c) The Company proposes to sell to Hampshire, individually and not
as Representative, 270,000 warrants (the "Representative's Warrants") to
purchase up to an aggregate of 270,000 shares of Common Stock (the "Warrant
Shares") for a purchase price of $0.001 per warrant, or an aggregate purchase
price of $270.00. The Representative's Warrants will have an exercise price per
share equal to 110% of the public offering price per share. The
Representative's Warrants shall be substantially in the form filed with the
National Association of Securities Dealers, Inc. ("NASD"). The
Representative's Warrants and the Warrant Shares are hereinafter referred to
collectively as the "Representative's Securities." The Stock and the
Representative's Securities are hereinafter referred to collectively as the
"Securities."
2. REPRESENTATIONS AND WARRANTIES.
The Company, represents and warrants to, and agrees with, the
Underwriters that:
(a) The Company has filed with the Securities and Exchange Commission
(the "Commission") a registration statement, and may have filed one or more
amendments thereto, on Form S-1 (Registration No. 333- ), including in such
registration statement and each such amendment a related preliminary prospectus,
for the registration of the Stock under the Securities Act of 1933, as amended
(the "Securities Act"). As used in this Agreement, the term "Registration
Statement" shall refer to such registration statement referred to in the first
sentence of this Section 2(a), as amended, on file with the Commission at the
time such registration statement is declared by the Commission to be effective
under the Securities Act (including the prospectus, financial statements, and
exhibits filed as a part thereof, provided, however, that such registration
statement, at the time it is declared by the Commission to be effective under
the Securities Act, may omit such information as is permitted to be omitted from
such registration statement when it becomes effective under the Securities Act
pursuant to Rule 430A of the General Rules and Regulations of the Commission
under the Securities Act (the "Regulations"), which information (the "Rule 430A
Information") shall be deemed to be included in such registration statement when
a final prospectus is filed with the Commission in accordance with Rules 430A
and 424(b)(1) or (4) of the Regulations); the term "Preliminary Prospectus"
shall refer to each prospectus included in the Registration Statement, or any
amendments thereto, before the Registration Statement is declared by the
Commission to be effective under the Securities Act, the form of prospectus
omitting Rule 430A Information included in the Registration Statement when the
Registration Statement becomes effective under the Securities Act, if applicable
(the "Rule 430A Prospectus"), and any prospectus filed by the Company with the
consent of the Underwriters pursuant to Rule 424(a) of the Regulations, and the
term "Prospectus" shall refer to (x) if the Company relies on Rule 434 of the
Regulations, the Term Sheet (as defined below) relating to the Stock that is
first filed pursuant to Rule 424(b)(7) of the Regulations, together with the
Preliminary Prospectus identified therein that the Term Sheet supplements, or
(y) if the Company does not rely on Rule 434 of the Regulations, the final
prospectus forming a part of the Registration Statement in the form first filed
with the Commission pursuant to Rule
-2-
424(b)(1) or (4) of the Regulations or, if no such filing is required, the form
of final prospectus forming a part of the Registration Statement. "Term Sheet"
shall mean any term sheet thereof satisfies the requirements of Rule 434 of the
Regulations. The date on which the Registration Statement is declared effective
by the Commission is referred to as the "Effective Date." For purposes of this
Agreement, all references to the Registration Statement, Prospectus, Preliminary
Prospectus or Term Sheet or to any amendment or supplement to any of the
foregoing shall be deemed to include the copy filed with the Commission pursuant
to its Electronic Data Gathering Analysis and Retrieval system ("XXXXX").
(b) When the Registration Statement becomes effective under the
Securities Act, and at all times subsequent thereto up to and including the
Closing Date (as defined in Section 3(a)) and each Additional Closing Date (as
defined in Section 3(b)), and during such longer period as the Prospectus may be
required to be delivered in connection with sales by the Underwriters or a
dealer, and during such longer period until any post-effective amendment thereto
shall become effective under the Securities Act, the Registration Statement (and
any post-effective amendment thereto) and the Prospectus (as amended or as
supplemented if the Company shall have filed with the Commission any amendment
or supplement to the Registration Statement or the Prospectus) will contain all
statements which are required to be stated therein in accordance with the
Securities Act and the Regulations, will comply with the Securities Act and the
Regulations in all material respects, and will not contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein, in the light of the
circumstances under which such statements were made, not misleading, and no
event will have occurred which should have been set forth in an amendment or
supplement to the Registration Statement or the Prospectus which has not then
been set forth in such an amendment or supplement; if a Rule 430A Prospectus is
included in the Registration Statement at the time it is declared by the
Commission to be effective under the Securities Act, the Prospectus filed
pursuant to Rules 430A and 424(b)(1) or (4) of the Regulations will contain all
Rule 430A Information and all statements which are required to be stated therein
in accordance with the Securities Act or the Regulations, will comply with the
Securities Act and the Regulations in all material respects, and will not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading;
and each Preliminary Prospectus, as of the date filed with the Commission,
contained all statements required to be stated therein, in the light of the
circumstances under which such statements were made, in accordance with the
Securities Act and the Regulations, complied with the Securities Act and the
Regulations in all material respects, and did not contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein, in the light of the
circumstances under which such statements were made, not misleading, except that
no representation or warranty is made in this Section 2(b) with respect to
statements or omissions made in reliance upon, and in conformity with, written
information furnished to the Company as stated in Section 8(b) with respect to
any
-3-
Underwriter by, or on behalf of, such Underwriter expressly for inclusion in the
Registration Statement, any Preliminary Prospectus, or the Prospectus, or any
amendment or supplement thereto. Each Preliminary Prospectus and the Prospectus
delivered to the Underwriters for use in connection with the offering of the
Stock will, at the time of delivery, be identical to the electronically
transmitted copies thereof filed with the Commission pursuant to XXXXX, except
to the extent permitted by Regulation S-T under the Securities Act.
(c) Neither the Commission nor the "blue sky" or securities authority
of any jurisdiction has issued an order (a "Stop Order") suspending the
effectiveness of or preventing or suspending the use of, the Registration
Statement, any Preliminary Prospectus, the Prospectus, or any amendment or
supplement thereto, refusing to permit the effectiveness of the Registration
Statement, or suspending the registration, qualification or exemption of the
Securities nor has any of such authorities instituted or to its best knowledge
threatened to institute any proceedings with respect to a Stop Order.
(d) Any contract, agreement, instrument, lease, or license required
to be described in the Registration Statement or the Prospectus has been
described therein. Any contract, agreement, instrument, lease, or license
required to be filed as an exhibit to the Registration Statement has been filed
with the Commission as an exhibit to the Registration Statement.
(e) The Company is a corporation duly organized and validly existing
under the laws of the State of Delaware, with full power and authority, and all
necessary consents, authorizations, approvals, orders, licenses, certificates
and permits of and from, and declarations and filings with, all federal, state,
local and other governmental authorities and all courts and other tribunals, to
own, lease, license, and use its properties and assets and to conduct its
business in the manner described in the Registration Statement and the
Prospectus, except where the failure to obtain such consents, authorizations,
approvals, orders, licenses, certificates and permits would not, individually or
in the aggregate, have a material adverse effect on the business, assets, future
prospects, results of operations or financial condition of the Company (a
"Material Adverse Effect"). The Company is duly qualified to do business as a
foreign corporation and is in good standing as such in every jurisdiction in
which its ownership, leasing, licensing, or use of property and assets or the
conduct of its business makes such qualification necessary, except where the
failure to so qualify will not have a Material Adverse Effect. A complete and
correct copy of the Certificate of Incorporation and By-Laws of the Company, as
currently in effect, have been delivered to you, and no changes therein will be
made subsequent to the date hereof and prior to the Closing Date.
(f) The Company has no subsidiaries (as defined in the Regulations).
(g) The authorized capital stock of the Company consists of
40,000,000 shares of Common Stock, of which 4,000,000 shares of Common Stock are
issued and
-4-
outstanding, and 4,000,000 shares of Preferred Stock, par value $0.001 per
share, no shares of which are outstanding. Each outstanding share of Common
Stock is validly authorized and issued, fully paid, and nonassessable, without
any personal liability attaching to the ownership thereof, and has not been
issued and is not owned or held in violation of any preemptive or similar rights
of shareholders. There is no commitment, plan, or arrangement to issue, and no
outstanding option, warrant, or other right calling for the issuance of, any
share of capital stock of the Company or any security or other instrument which
by its terms is convertible into, or exercisable or exchangeable for, shares of
capital stock of the Company, except as may be properly described in the
Prospectus. There is outstanding no security or other instrument which by its
terms is convertible into, or exercisable or exchangeable for, capital stock of
the Company, except as may be properly described in the Prospectus. The
certificates evidencing the shares of Common Stock are in due and proper form.
(h) The financial statements of the Company and Medica Systems, Inc.
("Medica") included in the Registration Statement and the Prospectus fairly
present, with respect to the Company, and Medica, as the case may be, the
financial position, the results of operations, the cash flows, and the other
information purported to be shown therein at the respective dates and for the
respective periods to which they apply. Such financial statements have been
prepared in accordance with generally accepted accounting principles
consistently applied throughout the periods involved, and are in accordance with
the books and records of the Company and Medica, as the case may be. King
Griffen & Xxxxxxx P.C., the accountants whose report on the audited financial
statements is filed with the Commission as a part of the Registration Statement,
are, and during the periods covered by its report included in the Registration
Statement and the Prospectus were, independent certified public accountants with
respect to the Company and Medica within the meaning of the Securities Act and
the Regulations. The selected and summary financial information included in the
Registration Statement and the Prospectus present fairly the information shown
therein and have been compiled on a basis substantially consistent with the
financial statements presented therein. [The pro forma financial statements and
other pro forma financial information included in the Prospectus have been
prepared in accordance with the Commission's rules and guidelines with respect
to pro forma financial information and have been properly compiled on the basis
described therein, and the assumptions used in the preparation thereof are, in
the Company's opinion, reasonable.] No other financial statements are required
by Form S-1 or otherwise to be included in the Registration Statement or the
Prospectus. There has at no time been a material adverse change in the
financial condition, results of operations, business, properties, assets,
liabilities or future prospects of the Company from the latest information set
forth in the Registration Statement or the Prospectus, except as may be
described in the Prospectus.
(i) The Company has a duly authorized and outstanding capitalization
as disclosed in the Prospectus under "Capitalization" and will have the adjusted
capitalization set forth therein at the Closing Date (based on the assumptions
set forth therein). The financial information and data set forth in the
Prospectus under
-5-
"Prospectus Summary," "Risk Factors," "Use of Proceeds," "Dilution,"
"Capitalization," "Selected Financial Data," "Management's Discussion and
Analysis of Financial Condition and Results of Operations," "Business," and
"Management," are fairly presented and prepared on a basis consistent with the
audited financial statements of the Company.
(j) There is no litigation, arbitration, claim, governmental or other
proceeding (formal or informal), or investigation pending, or, to the best
knowledge of the Company, threatened with respect to the Company or any of its
operations, businesses, properties, or assets, except as may be described in the
Prospectus or such as individually or in the aggregate do not now have, and will
not in the future have, a Material Adverse Effect. The Company is not in
violation of, or in default with respect to, any law, rule, regulation, order,
judgment, or decree, except as may be described in the Prospectus or such as in
the aggregate do not now have, and will not in the future have, a Material
Adverse Effect nor is the Company currently required to take any action in order
to avoid any such violation or default.
(k) The Company has good and marketable title to all properties and
assets which the Prospectus indicates are owned by it, free and clear of all
liens, security interests, pledges, charges, encumbrances, and mortgages, except
as may be described in the Prospectus. No real property owned, leased,
licensed, or used by the Company lies in an area which is, or to the knowledge
of the Company will be, subject to zoning, use, or building code restrictions
which would prohibit the present or contemplated use thereof in a material
respect, and, no state of facts relating to the actions or inaction of another
person or entity or his or its ownership, leasing, licensing, or use of any real
or personal property exists or will exist which would prevent, the continued
effective ownership, leasing, licensing, or use of such real property in the
business of the Company as presently conducted or as the Prospectus indicates it
contemplates conducting, except as may be described in the Prospectus.
(l) Neither the Company, nor to the knowledge of the Company, any
other party is now, or is expected by the Company to be, in violation or breach
of, or in default with respect to, any provision of any contract, agreement,
instrument, lease, license, arrangement, or understanding to which the Company
is a party, and each such contract, agreement, instrument, lease, license,
arrangement, and understanding is in full force and effect and is the legal,
valid, and binding obligation of the parties thereto and is enforceable as to
them in accordance with its respective terms, except in each case, that which
would not have a Material Adverse Effect. The Company enjoys peaceful and
undisturbed possession under all leases and licenses under which it is
operating, except where the failure of such possession would not have a Material
Adverse Effect. Except as described in the Prospectus, the Company is not a
party to, or bound by, any contract, agreement, instrument, lease, license,
arrangement, or understanding, or subject to any charter or other restriction,
which has had, or may in the future have, a Material Adverse Effect. The
Company is not violation or breach of, or in default with respect to, any term
of its Certificate of Incorporation and By-Laws.
-6-
(m) The Company owns or possesses adequate licenses or other rights
to use, free and clear of all liens, charges, claims, encumbrances and
restrictions of any kind whatsoever, all patents, patent rights, inventions,
trade secrets, technology, licenses, know-how, proprietary techniques, including
processes and substances, trademarks, service marks, trade names, and copyrights
described or referred to in the Prospectus as owned or used by it or which are
necessary for the conduct of its business as currently conducted as described
in the Prospectus and, to the best knowledge of the Company, its business as
contemplated as described in the Prospectus. To the best knowledge of the
Company, all such patents, patent rights, licenses, trademarks, service marks,
and copyrights are valid and enforceable, are not being infringed by any third
parties which infringement could, singly or in the aggregate, have a Material
Adverse Effect, and are uncontested by any third party. Except as disclosed in
the Registration Statement and the Prospectus, the Company is not obligated or
under any liability whatsoever to make any payments by way of royalties, fees or
otherwise to any owner or licensee of, or other claimant to, any patent,
trademark, service xxxx, tradename, copyright, trade secret, know-how,
technology or other intangible asset, with respect to the use thereof or in
connection with the conduct of its business or otherwise. The Company has no
knowledge of, nor has it received any notice of, infringement of, or conflict
with, asserted rights of others with respect to any patents, patent rights,
inventions, trade secrets, licenses, know-how, proprietary techniques, including
processes and substances, trademarks, service marks, trade names, or copyrights
which, singly or in the aggregate, if the subject of an unfavorable decision,
ruling, or finding could have a Material Adverse Effect.
(n) The Company owns and has the right to use all trade secrets,
know-how (including all other unpatented and/or unpatentable proprietary or
confidential information, systems or procedures), inventions, designs,
processes, works of authorship, computer programs and technical data and
information that are material to its business, properties and operations.
(o) Neither the Company, nor, to the best knowledge of the Company,
any director, officer, agent, employee, or other person associated with, or
acting on behalf of, the Company has, directly or indirectly used any corporate
funds for unlawful contributions, gifts, entertainment, or other unlawful
expenses relating to political activity, made any unlawful payment to foreign or
domestic government officials or employees or to foreign or domestic political
parties or campaigns from corporate funds, violated any provision of the United
States Foreign Corrupt Practices Act of 1977, as amended, or made any bribe,
rebate, payoff, influence payment, kickback, or other unlawful payment. The
Company's internal accounting controls and procedures are sufficient to cause
the Company to comply in all respects with the Foreign Corrupt Practices Act of
1977, as amended.
(p) The Company has all requisite power and authority to execute,
deliver, and perform this Agreement and the Representative's Warrants. All
necessary corporate proceedings of the Company have been duly taken to authorize
the execution, delivery and performance by the Company of this Agreement and the
Representative's
-7-
Warrants. This Agreement has been duly authorized, executed, and delivered by
the Company and is the legal, valid, and binding obligation of the Company, and
is enforceable as to the Company in accordance with its terms. The
Representative's Warrants have been duly authorized by the Company and, when
executed and delivered by the Company, will be legal, valid, and binding
obligations of the Company, each enforceable as to the Company in accordance
with its terms. No consent, authorization, approval, order, license,
certificate, or permit of or from, or declaration or filing with any federal,
state, local, or other governmental authority or any court or other tribunal is
required by the Company for the execution, delivery, or performance by the
Company of this Agreement or the Representative's Warrants, except filings under
the Securities Act which have been or will be made before the Closing Date, and
consents consisting only of consents under "blue sky" or securities laws, which
have been obtained at or prior to the date of this Agreement. No consent of any
party to any contract, agreement, instrument, lease, license, arrangement, or
understanding to which the Company is a party, or to which any of its properties
or assets are subject, is required for the execution, delivery, or performance
of this Agreement and the Representative's Warrants, and the execution,
delivery, and performance of this Agreement and the Representative's Warrants
will not violate, result in a breach of, conflict with, result in the creation
or imposition of any lien, charge, or encumbrance upon any properties or assets
of the Company pursuant to the terms of, or, with or without the giving of
notice or the passage of time or both, entitle any party to terminate or call a
default under, any such contract, agreement, instrument, lease, license,
arrangement, or understanding, or violate, result in a breach of, or conflict
with any term of the Certificate of Incorporation and By-Laws of the Company or
violate, result in a breach of, or conflict with, any law, rule, regulation,
order, judgment, or decree binding on the Company or to which any of its
operations, businesses, properties, or assets are subject.
(q) The Stock is validly authorized and, when issued and delivered in
accordance with this Agreement, will be validly issued, fully paid, and
nonassessable, without any personal liability attaching to the ownership
thereof, and will not be issued in violation of any preemptive or similar rights
of stockholders, and the Underwriters will receive good title to the Stock
purchased by them, free and clear of all liens, security interests, pledges,
charges, encumbrances, stockholders' agreements, and voting trusts. The Stock
conforms to all statements relating thereto contained in the Registration
Statement and the Prospectus.
(r) The Warrant Shares are validly authorized and have been duly and
validly reserved for issuance and, when issued and delivered upon exercise of
the Representative's Warrants in accordance with the terms thereof, will be
validly issued, fully paid, and nonassessable, without any personal liability
attaching to the ownership thereof, and will not be issued in violation of any
preemptive or similar rights of stockholders, and the holders of the
Representative's Warrants will receive good title to the securities purchased by
them upon the exercise of the Representative's Warrants, free and clear of all
liens, security interests, pledges, charges, encumbrances, stockholders'
agreements and voting trusts. The Representative's Securities conform
-8-
in all material respects to all statements relating thereto contained in the
Registration Statement and the Prospectus.
(s) Subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus, and except as may
otherwise be described in the Registration Statement or Prospectus, the Company
has not (i) issued any securities or incurred any liability or obligation,
primary or contingent, for borrowed money, (ii) entered into any material
transaction not in the ordinary course of business, (iii) declared or paid any
dividend on its shares of Common Stock, or (iv) experienced any changes or any
development which could reasonably be expected to have a Material Adverse
Effect.
(t) Neither the Company, nor any of its officers, directors, or
affiliates (as defined in the Regulations), has taken or will take, directly or
indirectly, prior to the termination of the offering contemplated by this
Agreement, any action designed to stabilize or manipulate the price of any
security of the Company, or which has caused or resulted in, or which might in
the future reasonably be expected to cause or result in, stabilization or
manipulation of the price of any security of the Company, to facilitate the sale
or resale of any of the Stock.
(u) The Company has obtained from each of its directors, officers and
stockholders holding an aggregate of 4,000,000 shares of Common Stock a written
agreement, in form and substance satisfactory to counsel for the Underwriters,
that, for a period of 18 months from the Effective Date he, she, or it will not,
without the prior written consent of the Representative, directly or indirectly,
offer, pledge, sell, contract to sell, grant any option for the sale of, or
otherwise dispose of, directly or indirectly, any shares of Common Stock or any
security or other instrument which by its terms is convertible into, or
exercisable or exchangeable for, shares of Common Stock or other securities of
the Company, including, without limitation, any shares of Common Stock issuable
pursuant to the terms of any employee stock options, provided, however, that
such persons may offer, sell, contract to sell, grant an option for the sale of,
or otherwise dispose of all or any part of his, her, or its shares of Common
Stock or other such security or instrument of the Company during such period if
such transaction is private in nature and the transferee of such shares of
Common Stock or other securities or instruments agrees, prior to such
transaction, to be bound by all of the provisions of such agreement.
(v) During the two-year period commencing on the effective date of
the Registration Statement, the Representative shall have the right of first
refusal (on terms at least as favorable as can be obtained from other sources)
to act as underwriter, placement agent or investment banker, as the case may be,
for any and all public offerings or private placements of the Company's
securities, or any merger, acquisition, or disposition of assets of the Company,
if the Company uses a lead manager, placement agent or investment banker
performing such functions for a fee. The Representative shall advise the
Company no later than seven days following the submission to the Representative
in writing of such proposed transaction(s) of its election to exercise said
-9-
right. If any such proposal is not accepted by the Representative, but later
modified, the Company will resubmit such proposal to the Representative. Should
the Representative elect, at any time, not to exercise said right, the
Representative's right of first refusal regarding future financings shall be
unaffected.
(w) The Company is not, and does not intend to conduct its business
in a manner in which it would be required to register as, an "investment
company" as defined in the Investment Company Act of 1940, as amended (the
"Investment Company Act"), and the rules and regulations promulgated thereunder.
(x) All issuances and sales of securities by the Company prior to the
date hereof were exempt from registration under the Securities Act and complied
in all respects with the provisions of all applicable federal and state
securities laws. No person or entity has the right to require registration of
shares of Common Stock or other securities of the Company because of the filing
or effectiveness of the Registration Statement, which right has not been waived,
except as set forth in the Prospectus, and no holder of any security of the
Company has the right to demand registration of any security owned by such
holder during the period ending 18 months after the date of the Prospectus,
except as set forth in the Prospectus.
(y) Except as may be set forth in the Prospectus, and except for the
payment of an aggregate of $__________ in full satisfaction of all obligations
to National Securities Corp., the Company has not incurred any liability for a
fee, commission, or other compensation on account of the employment of a broker
or finder in connection with the transactions contemplated by this Agreement.
(z) No officer, director, or shareholder of the Company has any
affiliation or association with the NASD or any member thereof, except as
disclosed in writing to the Underwriters.
(aa) The Company has filed all necessary federal, state, local, and
municipal, and all foreign income and franchise tax returns and other reports
required to be filed and has paid all taxes shown as due thereon and all
assessments received by it to the extent that the same have become due. The
provisions for income taxes payable, if any, shown on the financial statements
filed with or as part of the Registration Statement and the Prospectus are
sufficient for all accrued and unpaid foreign and domestic taxes, whether or not
disputed, and for all periods to and including the dates of such financial
statements, and there is no material tax deficiency which has been, or, to the
knowledge of the Company, might be, asserted against the Company. Except as
disclosed in writing to the Underwriters, or set forth in the Registration
Statement and the Prospectus, the Company has not executed or filed with any
taxing authority, foreign or domestic, any agreement extending the period for
assessment or collection of any income taxes and the Company is not a party to
any pending action or proceeding by any foreign or domestic governmental agency
for assessment or collection of taxes, and no claims for assessment or
collection of taxes have been asserted against the Company.
-10-
(ab) To the best knowledge of the Company, none of the activities or
business of the Company is in violation of, or will cause the Company to
violate, any law, rule, regulation, or order of the United States, or any
country, municipality or locality, or of any agency or body of the United States
or of any state, municipality or locality thereof, the violation of which would
have a Material Adverse Effect.
(ac) The Common Stock has been approved for quotation on the Nasdaq
National Market subject to official notice of issuance.
(ad) The Company maintains insurance covering its properties,
operations, personnel and businesses. Such insurance insures against such
losses and risks and in such amounts as are prudent and customary in the
businesses in which it is engaged. The Company has not been refused any
casualty insurance coverage sought or applied for; and the Company has no reason
to believe that it will not be able to renew its existing insurance coverage as
and when such coverage expires or to obtain similar coverage from similar
insurers as may be necessary to continue its business at a cost that would not
have a Material Adverse Effect. All such insurance is outstanding and duly in
force on the date hereof.
(ae) The Company is in compliance with all applicable laws or
regulations relating to pollution or protection of human health or the
environment ("Environmental Laws") in the states and countries in which it has
facilities or operates, except where the failure to be in compliance would not
have a Material Adverse Effect. The Company has not authorized, conducted or
has knowledge of the generation, transportation, storage, use, treatment,
disposal or release of any hazardous substance, hazardous waste, hazardous
material, hazardous constituent, toxic substance, pollutant, contaminant,
petroleum product, natural gas, liquified gas or synthetic gas, defined or
regulated under any Environmental Law on, in or under any property currently
leased or owned or by any means controlled by the Company (the "Real Property")
in violation of any applicable law, except for any violation which would not
have a Material Adverse Effect; there is no pending or, to the Company's
knowledge, threatened claim, action, litigation or any administrative agency
proceeding involving the Company or any of its properties, nor has the Company
received any written notice, or any oral notice to any executive officer of the
Company or any other employee responsible for receipt of any such notice, from
any governmental entity or third party, that (A) alleges a violation of any
Environmental Laws by the Company or any person or entity whose liability for a
violation of an Environmental Law the Company has retained or assumed either
contractually or by operation of law, which liability or violation could be
reasonably expected to have a Material Adverse Effect, (B) alleges the Company
is a liable party under the Comprehensive Environmental Response, Compensation
and Liability Act, 42 U.S.C. Section 9601 ET SEQ., or any state superfund law,
(C) alleges possible contamination of the environment by the Company or (D)
alleges possible contamination of the Real Property.
(af) The Company maintains a system of internal accounting controls
sufficient to provide reasonable assurance that (A) transactions are executed in
-11-
accordance with management's general or specific authorizations, (B)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain asset accountability, (C) access to assets is permitted only in
accordance with management's general or specific authorization and (D) the
recorded accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
(ag) The Company is not involved in any labor dispute and, to the
knowledge of the Company, no such dispute is threatened.
(ah) The Company is not presently doing business with the government
of Cuba or with any person or affiliate located in Cuba. If, at any time after
the date on which the Registration Statement is declared by the Commission to be
effective under the Securities Act or with the Florida Department of Banking and
Finance (the "Florida Department"), whichever is later, and prior to the end of
the period referred to in the first clause of Section 2(b) hereof, the Company
commences engaging in business with the government of Cuba or with any person or
affiliate located in Cuba, the Company will so inform the Florida Department
within 90 days after such commencement of business in Cuba, and, during the
period referred to in Section 2(b) hereof, will inform the Florida Department
within 90 days after any change occurs with respect to previously reported
information.
3. PURCHASE, SALE, AND DELIVERY OF THE STOCK AND THE
REPRESENTATIVE'S WARRANTS.
(a) On the basis of the representations, warranties, covenants, and
agreements of the Company herein contained, but subject to the terms and
conditions herein set forth, the Company agrees to issue and sell to the
Underwriters, and the Underwriters, severally and not jointly, agree to purchase
from the Company, the number of shares of Firm Stock set forth opposite the
respective names of the Underwriters in Schedule I hereto.
The purchase price per share of the Firm Stock to be paid by the
several Underwriters shall be $______. The initial public offering price per
share of the Firm Stock shall be $______.
Payment for the Firm Stock by the Underwriters shall be made by
certified or official bank check in New York Clearinghouse (next day) funds or
by electronic wire transfer of next day funds, payable to the order of the
Company, at the offices of Hampshire Securities Corporation, 000 Xxxxx Xxxxxx,
0xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, or at such other place in the New York City
metropolitan area as the Representative shall determine and advise the Company
by at least two full days' notice in writing, upon delivery of the Firm Stock to
the Representative for the respective accounts of the Underwriters. Such
delivery and payment shall be made at 10:00 a.m., New York City local time, on
the third or fourth business day (as permitted under
-12-
Rule 15c6-1 under the Securities Exchange Act of 1934, as amended) following the
time of the initial public offering, as defined in Section 11(a) hereof, or at
such other time as shall be agreed upon between the Representative and the
Company. The time and date of such delivery and payment are hereinafter
referred to as the "Closing Date."
Certificates representing the Firm Stock shall be registered in such
name or names and in such authorized denominations as the Representative may
request in writing at least two full business days prior to the Closing Date.
The Company shall permit the Representative to examine and package such
certificates for delivery at least one full business day prior to the Closing
Date.
(b) The Company hereby grants to the Underwriters an Over-allotment
Option to purchase up to 405,000 shares of Common Stock, as may be necessary to
cover over-allotments, at the same purchase price per share to be paid by the
Underwriters to the Company for the Firm Stock as provided for in this
Section 3. The Over-allotment Option may be exercised only to cover
over-allotments in the sale of Stock by the Underwriters. The Over-allotment
Option may be exercised by the Underwriters on the basis of the representations,
warranties, covenants, and agreements of the Company herein contained, but
subject to the terms and conditions herein set forth, at any time and from time
to time on or before the 45th day following the Effective Date by written notice
by the Underwriters to the Company. Such notice shall set forth the aggregate
number of shares of Additional Stock as to which the Over-allotment Option is
being exercised, the name or names in which the certificates representing the
Additional Stock are to be registered, the authorized denominations in which the
Additional Stock are to be registered, and the time and date, as determined by
the Underwriters, when such shares of Additional Stock are to be delivered (each
such time and date are hereinafter referred to as an "Additional Closing Date"),
provided, however, that no Additional Closing Date shall be earlier than the
Closing Date nor earlier than the second business day after the date on which
the notice of the exercise of the Over-allotment Option shall have been given
nor later than the eighth business day after the date on which such notice shall
have been given.
In the event that the Company declares or pays a dividend or a
distribution on the shares of Common Stock, whether in the form of cash, shares
of Common Stock or other consideration, prior to the Additional Closing Date,
such dividend or distribution shall also be paid on the Additional Stock on the
later of the Additional Closing Date and the date on which such dividend or
distribution is payable.
Payment for the Additional Stock by the Underwriters shall be made by
certified or official bank check in New York Clearinghouse (next day) funds or
by electronic wire transfer of next day funds, payable to the order of the
Company at the offices of Hampshire Securities Corporation, 000 Xxxxx Xxxxxx,
0xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, or at such other place in the New York City
metropolitan area as the Representative shall determine and advise the Company
by at least two full days' notice in writing, upon delivery of the Additional
Stock to the Underwriters.
-13-
Certificates for the Additional Stock shall be registered in such name
or names and in such authorized denominations as the Underwriters may request in
writing at least two full business days prior to the Additional Closing Date
with respect thereto. The Company shall permit the Underwriters to examine and
package such certificates for delivery at least one full business day prior to
the Additional Closing Date with respect thereto.
(c) The Company hereby agrees to issue and sell to the Representative
and/or its designees on the Closing Date the Representative's Warrants to
purchase the Warrant Shares for an aggregate purchase price for the
Representative's Warrants of $270.00.
Delivery and payment for the Representative's Warrants shall be made
on the Closing Date. The Company shall deliver to the Representative, upon
payment therefor, certificates representing the Representative's Warrants in the
name or names and in such authorized denominations as the Representative may
request. The Representative's Warrants shall be exercisable for a period of
four years commencing one year from the date on which the Registration Statement
was declared effective under the Securities Act at an initial exercise price per
Warrant Share equal to $____.
(d) It is understood that the Representative may (but shall not be
obligated to) make any and all the payments required pursuant to this Section 3
on behalf of any Underwriters whose check or checks shall not have been received
by the Representative at the time of delivery of the Stock to be purchased by
such Underwriter or Underwriters. Any such payment by the Representative shall
not relieve any such Underwriter or Underwriters of any of its or their
obligations hereunder.
4. OFFERING. The Underwriters are to make a public offering of the
Firm Stock as soon, on or after the date on which the Registration Statement
becomes effective under the Securities Act, as the Underwriters deem it
advisable so to do. The Firm Stock is to be initially offered to the public at
the initial public offering price as provided for in Section 3(a) (such price
being hereinafter referred to as the "public offering price"). After the initial
public offering, the Underwriters may from time to time increase or decrease the
public offering price, in the sole discretion of the Underwriters, by reason of
changes in general market conditions or otherwise.
5. COVENANTS. The Company covenants with the Underwriters that it
will:
(a) Use its best efforts to cause the Registration Statement to
become effective under the Securities Act as promptly as possible, and notify
the Underwriters and counsel to the Underwriters immediately, and confirm such
notice in writing, (i) when the Registration Statement and any post-effective
amendment thereto, (ii) of the receipt of any comments from the Commission or
the "blue sky" or securities authority of any jurisdiction regarding the
Registration Statement, any post-effective amendment thereto, the Prospectus, or
any amendment or supplement thereto, (iii) of the filing
-14-
with the Commission of any supplement to the Prospectus, and (iv) of the receipt
of any notification with respect to a Stop Order by the Commission. The Company
will use its best efforts to prevent the issuance of any Stop Order and, if any
Stop Order is issued, to obtain the lifting thereof as promptly as possible. If
the Registration Statement has become or becomes effective under the Securities
Act with a form of prospectus omitting Rule 430A information, or filing of the
Prospectus with the Commission is otherwise required under Rule 424(b) of the
Regulations, the Company will file with the Commission the Prospectus, properly
completed, pursuant to Rule 424(b) of the Regulations within the time period
prescribed and will provide evidence satisfactory to the Underwriters of such
timely filing.
(b) During the time when a prospectus relating to the Firm Stock or
the Additional Stock is required to be delivered hereunder or under the
Securities Act or the Regulations, comply with all requirements imposed upon it
by the Securities Act, as now existing and as hereafter amended, and by the
Regulations, as from time to time in force, so far as necessary to permit the
continuance of sales of, or dealings in, the Firm Stock and the Additional Stock
in accordance with the provisions hereof and the Prospectus. If, at any time
when a prospectus relating to the Firm Stock or the Additional Stock is required
to be delivered hereunder or under the Securities Act or the Regulations, any
event shall have occurred as a result of which, in the reasonable opinion of
counsel for the Company or of counsel for the Underwriters, the Registration
Statement or the Prospectus as then amended or supplemented contains any untrue
statement of a material fact or omits to state any material fact required to be
stated therein or necessary to make the statements therein not misleading, or
if, in the opinion of either of such counsel, it is necessary at any time to
amend or supplement the Registration Statement or the Prospectus to comply with
the Securities Act or the Regulations, the Company will immediately notify the
Underwriters and promptly prepare and file with the Commission an appropriate
amendment or supplement (in form and substance reasonably satisfactory to the
Underwriters and counsel to the Underwriters) which will correct such statement
or omission or which will effect such compliance and will use its best efforts
to have any such amendment declared effective under the Securities Act as soon
as possible. The Company will not file any amendment of or supplement to the
Registration Statement or Prospectus which is not approved by the Underwriters
after reasonable notice from the Company to the Underwriters, which approval
shall not be unreasonably withheld or delayed.
(c) Deliver without charge to the Underwriters such number of copies
of each Preliminary Prospectus as may reasonably be requested by such
Underwriters and, as soon as the Registration Statement, or any amendment
thereto, becomes effective under the Securities Act or a supplement is filed
with the Commission, deliver without charge to the Underwriters one signed copy
of the Registration Statement, including exhibits, or such amendment thereto, as
the case may be, and two copies of any supplement thereto, and deliver without
charge to the Underwriters such number of copies of the Prospectus, the
Registration Statement, and amendments and supplements thereto, if any, without
exhibits, as the Underwriters may request for the purposes contemplated by the
Securities Act.
-15-
(d) Endeavor in good faith, in cooperation with the Underwriters, at
or prior to the time the Registration Statement becomes effective under the
Securities Act, to qualify the Stock for offering and sale under the "blue sky"
or securities laws of such jurisdictions as may be designated by the
Underwriters, provided, however, that no such qualification shall be required in
any jurisdiction where, as a result thereof, the Company would be subject to
service of general process or to taxation as a foreign corporation doing
business in such jurisdiction to which it is not then subject. In each
jurisdiction where such qualification shall be effected, the Company will,
unless the Underwriters agrees in writing that such action is not at the time
necessary or advisable, file and make such statements or reports at such times
as are or may be required by the laws of such jurisdiction.
(e) Make generally available, within the meaning of Section 11(a) of
the Securities Act and the Regulations, to its security holders as soon as
practicable, but not later than 45 days after the end of the 12-month period
beginning at the end of the fiscal quarter of the Company during which the
Effective Date occurs (or 90 days, if such 12-month period coincides with the
Company's fiscal year), an earnings statement, which need not be certified by
independent certified public accountants unless required by the Securities Act
or the Regulations, but which shall satisfy the provisions of Section 11(a) of
the Securities Act and the Regulations, covering a period of at least 12 months
beginning after the date on which the Registration Statement was declared
effective under the Securities Act. The Company will furnish to its
stockholders a copy of its annual reports containing financial statements
audited by the Company's independent accountants and quarterly reports
containing unaudited financial information for the first three quarters of each
year.
(f) For a period of 18 months after the date of the Prospectus, not,
without the prior written consent of the Representative, offer, issue, sell,
contract to sell, grant any option for the sale of, or otherwise dispose of,
directly or indirectly, any shares of Common Stock or other securities of the
Company, or any security or other instrument which by its terms is convertible
into, or exercisable or exchangeable for, shares of Common Stock, except as
contemplated by Section 3 hereof and except for (i) the issuance of stock
options, or shares of Common Stock issuable upon the exercise thereof, which
have been or may be granted pursuant to the Company's existing stock option
plans, up to an aggregate of [600,000] shares of Common Stock, as described in
the Prospectus and (ii) the issuance of the Warrant Shares upon exercise of the
Representative's Warrants.
(g) For a period of five years after Effective Date furnish the
Representative without charge, the following:
(i) within 90 days after the end of each fiscal year, one
copy of financial statements certified by independent certified public
accountants, including a balance sheet, statement of income, and statement of
changes in cash flows of the Company and its then existing subsidiaries, if any,
with supporting schedules, prepared
-16-
in accordance with generally accepted accounting principles as at the end of
such fiscal year and for the 12 months then ended, which may be on a
consolidated basis;
(ii) as soon as practicable after they have been sent to
stockholders of the Company or filed with, or furnished to, the Commission or
the NASD, one copy of each annual and interim financial and other report or
communication sent by the Company to its stockholders or filed with, or
furnished to, the Commission or the NASD;
(iii) as soon as practicable, one copy of every press release
and every material news item and article in respect of the Company, including
any subsidiary, or its affairs which was released by the Company; and
(iv) such additional documents and information with respect to
the Company, and its affairs, as the Representative may from time to time
reasonably request, provided, however, that such additional documents and
information shall be received by the Representative on a confidential basis,
unless otherwise disclosed to the public, and shall not be used in violation of
the laws of the federal securities laws and the rules and regulations
promulgated thereunder.
(h) Apply the net proceeds received by the Company from the offering
contemplated by this Agreement in the manner set forth under the heading "Use of
Proceeds" in the Prospectus.
(i) Furnish to the Underwriters as early as practicable prior to the
Closing Date and each Additional Closing Date, if any, as the case may be, but
not less than two full business days prior thereto, a copy of the latest
available unaudited interim financial statements of the Company which have been
read by the Company's independent certified public accountants, as stated in
their letters to be furnished pursuant to Section 7(f) hereof.
(j) File no amendment or supplement to the Registration Statement or
Prospectus at any time, whether before or after the date on which the
Registration Statement was declared effective under the Securities Act, unless
such filing shall comply with the Securities Act and the Regulations, and unless
the Representative shall previously have been advised of such filing and
furnished with a copy thereof, and the Representative shall have approved such
filing in writing, such approval not to be unreasonably withheld. Until the
later of (i) the completion by the Underwriters of the distribution of the Stock
(but in no event more than nine months after the date on which the Registration
Statement shall have been declared effective under the Securities Act) and (ii)
25 days after the date on which the Registration Statement shall have been
declared effective under the Securities Act, the Company will prepare and file
with the Commission, promptly upon the Representative's request, any amendments
or supplements to the Registration Statement or the Prospectus which, in the
Representative's reasonable opinion and the reasonable opinion of its counsel,
may be necessary or advisable in connection with the distribution of the Stock.
-17-
(k) File timely with the Commission an appropriate form with respect
to the registration of the shares of Common Stock pursuant to Section 12(g) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act") to become
effective under the Exchange Act concurrently with the effectiveness of the
Registration Statement under the Securities Act and comply with all
registration, filing, and reporting requirements of the Exchange Act, which may
from time to time be applicable to the Company.
(l) Comply with all provisions of all undertakings contained in the
Registration Statement.
(m) Prior to the later of 25 days after the Effective Date or any
Additional Closing Date, as the case may be, issue no press release or other
communication, directly or indirectly, and hold no press conference with respect
to the Company, the financial condition, results of operations, business,
properties, assets, liabilities or future prospects of the Company or this
offering, without the prior written consent of the Representative, which consent
shall not be unreasonably withheld.
(n) Make all filings required to maintain the inclusion of the
Company Stock on the Nasdaq National Market for at least five years from the
date of this Agreement.
(o) On the Closing Date, sell to the Representative, the
Representative's Warrants at an aggregate price equal to $270.00, which
Representative's Warrants shall be substantially in the form filed with the
NASD.
(p) Until expiration of the Representative's Warrants, keep reserved
sufficient shares of Common Stock for issuance upon exercise of the
Representative's Warrants.
(q) Deliver to the Representative, without charge, within a
reasonable period after the last Additional Closing Date or the expiration of
the period during which the Representative may exercise the Over-allotment
Option, five sets of bound volumes of the Registration Statement and all related
materials to the individuals designated by the Representative or counsel to the
Representative.
(r) For a period of three years from the Effective Date, provide, at
its sole expense, to the Representative copies of the Company's daily transfer
sheets, if so requested by the Representative.
(s) For a period of three years from the Effective Date, the Company
shall use its best efforts to cause two persons to be elected to the Company's
Board of Directors who are deemed to be independent of the Company's management
within the meaning of the rules of the Nasdaq National Market.
-18-
(t) For a period of three years from the Effective Date, the
Representative shall have the right to appoint a designee as an observer of the
Company's Board of Directors. Such observer will have the right to attend all
meetings of the Board of Directors (and participate in all telephonic conference
calls of the Board). Such observer shall be entitled to receive reimbursement
for all out-of-pocket expenses incurred in attending such meetings, including,
but not limited to, food, lodging and economy transportation. The
Representative shall be given notice of such meetings at the same time and in
the same manner as directors of the Company are informed. The Representative
and such observer shall be indemnified to the same extent as the other
independent directors. The Company will use its best efforts to purchase
directors and officers insurance in an amount of not less than $2,000,000;
provided, however, that the Company shall not be required to pay more than
$50,000 per year in order to maintain such insurance, and if insurance in such
amount is not available at such cost, the Company shall purchase that amount of
such insurance which is available at a cost of $50,000 per year. The Company
will use its best efforts to extend the coverage of such insurance to the
observer.
(u) Maintain key-person life insurance, written by such insurance
company or agency which is reasonably acceptable to the Representative, payable
to the Company on the life of Xx X. Xxxxx, President of the Company in the
amount of at least $1,000,000, for the period of time equal to the longer of
three years from the Effective Date and the term of the employment agreement
between the Company and Xx. Xxxxx.
(v) Cause stockholders owning at least five percent (5%) of the
Company's outstanding shares of Common Stock as of the date hereof, and use its
best efforts to cause stockholders owning at least five percent (5%) of the
Company's outstanding shares of Common Stock immediately following the Closing
Date, to grant to the Representative a preferential right for a period of 18
months following the Effective Date to sell for the account of such holder any
securities sold pursuant to Rule 144 under the Securities Act. Each of such
holders shall agree to consult with the Representative with regard to any such
sale and will offer the Representative the exclusive opportunity to sell such
securities on terms at least as favorable to such holder as such holder can
secure elsewhere. If the Representative fails to accept in writing any such
proposal for sale by such holder within seven (7) business days after receipt of
a notice containing such proposal, then the Representative shall have no claim
or right with respect to any such sales contained in such notice. If,
thereafter, such proposal is modified in any material respect, such holders
shall adopt the same procedure as with respect to the original proposal.
(w) Except as set forth in the second sentence of this Section 5(w),
until the expiration of three years from the Effective Date, the Company will
not effect a change in the independent certified public accountants for the
Company unless either the Company has received the Representative's prior
written consent or such substitute independent certified public accountant is
one of the "big six" firms. For all fiscal periods commencing on or after
January 31, 1998, the Company will retain as its
-19-
independent certified public accountants, the firm of Ernst & Young LLP or
another "big six" firm.
6. PAYMENT OF EXPENSES. The Company hereby agrees to pay all
expenses (other than fees of counsel for the Underwriters, except as provided in
subdivision (c) of this Section 6) in connection with (a) the preparation and
printing of the Registration Statement including all amendments thereto, the
Prospectus, this Agreement and related other underwriting documents, including
the cost of all copies thereof and of the Preliminary Prospectuses and of the
Prospectus and any amendments or supplements thereto supplied to the
Underwriters in quantities as hereinabove stated, (b) the issuance, sale,
transfer, and delivery (as applicable) of the Securities, including any transfer
or other taxes payable thereon, (c) the qualification of the Securities under
state or foreign "blue sky" or securities laws, including the costs of printing
and mailing any preliminary and final "Blue Sky Survey" and the fees and
disbursements of counsel for the Underwriters in connection therewith in the
amount of up to $35,000 ($________ if Nasdaq National Market listing is not
obtained) plus disbursements in connection therewith, (d) the filing fees
payable to the NASD, and the jurisdictions in which such qualification is
sought, (e) any fees relating to the listing of the shares of Common Stock on
the Nasdaq National Market, (f) the cost of printing certificates representing
shares of Common Stock and the Representative's Warrants (g) the fees of the
transfer agent for the shares of Common Stock, (h) the cost of publication of
"tombstone" advertisements with respect to the offering; provided that the cost
thereof to the Company will not exceed $30,000 in the aggregate, (i) all
expenses relating to the "roadshow" except the Underwriters' travel and lodging,
and (j) a non-accountable expense allowance equal to three percent (3%) of the
gross proceeds of the sale of the Firm Stock and any Additional Stock with
respect to which the Over-allotment Option has been exercised to the
Representative on the Closing Date or the Additional Closing Date, as the case
may be (less $25,000 previously paid to the Representative). Notwithstanding
the foregoing, if the offering contemplated hereby should be terminated, the
Company agrees to pay the Underwriters only the out-of-pocket expenses incurred
by the Underwriters in connection with the Agreement and the proposed offer,
sale, and delivery of Securities.
7. CONDITIONS OF UNDERWRITER'S OBLIGATIONS. The obligations of the
Underwriters to purchase and pay for the Firm Stock and the Underwriters to
purchase and pay for the Additional Stock, as provided herein, and the
obligation of the Representative to purchase and pay for the Representative's
Warrants, each as provided herein, shall be subject, in the discretion of the
Representative's, to the continuing accuracy of the representations and
warranties of the Company contained herein and in each certificate and document
contemplated under this Agreement to be delivered to the Underwriters, as of the
date hereof and as of the Closing Date (or any Additional Closing Date, as the
case may be), to the performance by the Company of its obligations hereunder,
and to the following conditions:
(a) The Registration Statement shall have become effective under the
Securities Act not later than 6:00 P.M., New York City local time, on the date
of this
-20-
Agreement or such later date and time as shall be consented to in writing by the
Underwriters, on or prior to the Closing Date, or any Additional Closing Date,
as the case may be, no Stop Order shall have been issued and no proceeding shall
have been initiated or threatened with respect to a Stop Order, and any request
by the Commission for additional information shall have been complied with by
the Company to the reasonable satisfaction of counsel for the Underwriters. If
required, the Prospectus shall have been filed with the Commission in the manner
and within the time period required by Rule 424(b) under the Securities Act.
(b) At the Closing Date and any Additional Closing Date, as the case
may be, the Underwriters shall have received the opinion of Brock, Fensterstock,
Xxxxxxxxxxx, XxXxxxxxx & Xxxx LLC, counsel for the Company, dated the date of
delivery, addressed to the Underwriters, and in the form and scope satisfactory
to counsel for the Underwriters, with reproduced copies or signed counterparts
thereof for the Underwriters, to the effect that:
(i) the Company is a corporation duly organized, validly
existing, and in good standing under the laws of its jurisdiction of
incorporation, with full corporate power and authority, and all necessary
consents, authorizations, approvals, orders, licenses, certificates, and permits
of and from, and declarations and filings with, all federal, state, local, and
other governmental authorities and all courts and other tribunals, to own,
lease, license, and use its properties and assets and to conduct its business in
the manner described in the Prospectus. The Company is duly qualified to do
business as a foreign corporation and is in good standing as such in every
jurisdiction in which its ownership, leasing, licensing, or use of property and
assets or the conduct of its business makes such qualification necessary, except
where the failure to so qualify or be in good standing would not have a material
Adverse Effect;
(ii) the authorized capital stock of the Company consists of
(1) 40,000,000 shares of Common Stock, of which 4,000,000 shares are outstanding
and (ii) 4,000,000 shares of Preferred Stock, par value $.001 per share, none of
which is outstanding. Each outstanding share of capital stock of the Company is
free and clear of all liens, security interests, pledges, charges, encumbrances,
stockholders' agreements, and voting trusts. Each outstanding share of Common
Stock is validly authorized and issued, fully paid, and nonassessable, without
any personal liability attaching to the ownership thereof, has not been issued
and is not owned or held in violation of any preemptive or similar rights of
stockholders. To the knowledge of such counsel, there is no commitment, plan,
or arrangement to issue, and no outstanding option, warrant, or other right
calling for the issuance of, any share of capital stock of the Company or any
security or other instrument which by its terms is convertible into, or
exercisable or exchangeable for, capital stock of the Company except as may be
described in the Prospectus. Except as described in the Prospectus, there is
outstanding no security or other instrument which by its terms is convertible
into, or exercisable or exchangeable for, capital stock of the Company. The
certificates evidencing the Common Stock are in due and proper form;
-21-
(iii) to the knowledge of such counsel, there is no litigation,
arbitration, claim, governmental or other proceeding (formal or informal), or
investigation pending, threatened, or in prospect (or any basis therefor) with
respect to the Company or any of its operations, businesses, properties, or
assets, except as may be described in the Prospectus or such as individually or
in the aggregate do not now have, and will not in the future have, a Material
Adverse Effect. To the knowledge of such counsel, the Company is not in
violation of, or in default with respect to, any law, rule, regulation, order,
judgment, or decree, except as may be described in the Prospectus or such as
individually or in the aggregate do not now have and will not in the future have
a Material Adverse Effect; nor is the Company required to take any action in
order to avoid any such violation or default;
(iv) to the knowledge of such counsel, neither the Company nor
any other party is now, or is expected by the Company to be, in violation or
breach of, or in default with respect to, any provision of any contract,
agreement, instrument, lease, license, arrangement, or understanding which is
material to the Company, and, to the knowledge of such counsel, each such
contract, agreement, instrument, lease, license, arrangement, or understanding
is in full force and effect and is the valid, legal, and binding obligation of
the parties thereto and is enforceable in accordance with its terms;
(v) the Company is not in violation or breach of, or in
default with respect to, any term of its respective Certificate of Incorporation
or By-Laws;
(vi) the Company has all requisite power and authority to
execute, deliver, and perform this Agreement and the Representative's Warrants.
All necessary corporate proceedings of the Company have been taken to authorize
the execution, delivery, and performance by the Company of this Agreement and
the Representative's Warrants. This Agreement has been duly authorized,
executed, and delivered by the Company, is the legal, valid, and binding
obligation of the Company, and, subject to applicable bankruptcy, insolvency,
and other laws affecting the enforceability of creditors' rights generally, is
enforceable as to the Company in accordance with its terms. The
Representative's Warrants have been duly authorized by the Company and, when
executed and delivered by the Company, will be legal, valid, and binding
obligations of the Company, each enforceable as to the Company in accordance
with its terms. No consent, authorization, approval, order, license,
certificate, or permit of or from, or declaration or filing with, any federal,
state, local, or other governmental authority or any court or other tribunal is
required by the Company for the execution, delivery, or performance by the
Company of this Agreement or the Representative's Warrants, except filings under
the Securities Act which have been made prior to the Closing Date or Additional
Closing Date, as the case may be, and consents consisting only of consents under
"blue sky" or securities laws, which have been obtained. No consent of any
party to any contract, agreement, instrument, lease, license, arrangement, or
understanding known to such counsel to which the Company is a party, or to which
any of its properties or assets are subject, is required for the execution,
delivery, or performance of this Agreement and the Representative's
-22-
Warrants; and the execution, delivery, and performance of this Agreement and the
Representative's Warrants will not violate, result in a breach of, conflict
with, result in the creation or imposition of any lien, charge, or encumbrance
upon any properties or assets of the Company pursuant to the terms of, or, with
or result in a breach of, or conflict with any law, rule, regulation, order,
judgment, or decree binding on the Company to which any of its operations,
business, properties, or assets are subject;
(vii) each share of Firm Stock to be delivered on the Closing
Date is validly authorized and, when issued and delivered in accordance with the
terms hereof, will be validly issued, fully paid, and nonassessable, without any
personal liability attaching to the ownership thereof, and will not be issued in
violation of any preemptive or similar rights of stockholders. Each share of
Additional Stock to be delivered on the Closing Date or any Additional Closing
Date, as applicable, is validly authorized and, when issued and delivered in
accordance with the terms hereof, will be validly issued, fully paid, and
nonassessable, without any personal liability attaching to the ownership
thereof, and will not be issued in violation of any preemptive or similar rights
of stockholders. The Underwriters will receive good title to the shares of Firm
Stock and Additional Stock purchased by them, respectively, free and clear of
all liens, security interests, pledges, charges, encumbrances, stockholders'
agreements, and voting trusts. The Additional Stock has been duly ad validly
reserved for issuance. The Stock conforms to all statements relating thereto
contained in the Registration Statement or the Prospectus;
(viii) the Warrant Shares are validly authorized and have been
duly and validly reserved for issuance pursuant to the terms of the
Representative's Warrants. The Representative's Warrants have been duly and
validly issued and delivered. The Warrant Shares, when issued and delivered in
accordance with the Representative's Warrants, will be validly issued, fully
paid, and nonassessable, without any personal liability attaching to the
ownership thereof, and will not have been issued in violation of any preemptive
rights of stockholders. The Representative, and any other holders of the
Representative's Warrants, will receive good title to the securities purchased
by them upon exercise of the Representative's Warrants, free and clear of all
liens, security interests, pledges, charges, encumbrance, stockholders'
agreements, and voting trusts. The Representative's Securities conform to all
statements relating thereto contained in the Registration Statement or the
Prospectus;
(ix) to the knowledge of such counsel, each contract,
agreement, instrument, lease, or license required to be described in the
Registration Statement or the Prospectus has been accurately described therein,
and each contract, agreement, instrument, lease, or license required to be filed
as an exhibit to the Registration Statement has been filed with the Commission
as an exhibit to the Registration Statement;
(x) insofar as statements in the Prospectus purport to
summarize the status of litigation or the provisions of laws, rules,
regulations, orders, judgments, decrees, contracts, agreements, instruments,
leases, or licenses, such statements have
-23-
been prepared or reviewed by such counsel and accurately reflect the status of
such litigation and provisions purported to be summarized and are correct in all
respects;
(xi) the Company is not an "investment company" as defined in
the Investment Company Act and the rules and regulations thereunder and, if the
Company conducts its business as set forth in the Prospectus, will not become an
"investment company", and will not be required to be registered under the
Investment Company Act;
(xii) to the knowledge of such counsel, no person or entity has
the right to require registration of shares of Common Stock or other securities
of the Company because of the filing or effectiveness of the Registration
Statement, except by persons or entities which have waived such rights as
described in the Registration Statement and the Prospectus;
(xiii) there is no stamp duty, value-added tax or any similar
tax or duty, payable by or on behalf of the Underwriters or the Company in Hong
Kong in connection with the authorization, issuance, sale and delivery of the
Securities to the Underwriters in the manner contemplated by this Agreement; and
(xiv) the Registration Statement has become effective under the
Securities Act, the Prospectus has been filed in accordance with Rule 424(b) of
the Regulations, including the applicable time periods set forth therein, or
such filing is not required. To the knowledge of such counsel, no Stop Order
has been issued and no proceeding for that purpose has been instituted or
threatened.
In addition, such counsel shall state that in the course of the
preparation of the Registration Statement and Prospectus, such counsel have
participated in conferences with representatives of the Underwriters, officers
and representatives of the Company and representatives of the independent
certified public accountants of the Company, at which conferences the contents
of the Registration Statement and the Prospectus and related matters were
discussed, and that although such counsel have not verified the accuracy,
completeness or fairness of the statements contained in the Registration
Statement, the Prospectus, or any amendment or supplement thereto, and
accordingly are not passing thereon, such counsel have no reason to believe that
(A) the Registration Statement (except as to financial statements and other
financial data and schedules which are or should be contained therein, as to
which such counsel need express no opinion) on the Effective Date, contained any
untrue statement of a material fact required to be stated therein, or omitted to
state any material fact required to be stated therein or necessary to make the
statements therein, not misleading, or (B) the Prospectus (except as to the
financial statements and other financial data and schedules which are or should
be contained therein, as to which such counsel need express no opinion), as of
its date or the date hereof, contained or contains any untrue statement of a
material fact or omitted or omits to state any material fact necessary in order
to make the statements therein, in light of the circumstances under which they
were made, not misleading or (C) the Registration
-24-
Statement and the Prospectus do not appear on their face to comply as to form in
all material respects with the requirements of the Securities Act and the
applicable Regulations.
In rendering such opinion, counsel for the Company may rely (A)
as to matters involving the application of laws other than the laws of the
United States and the laws of the State of New York, to the extent counsel for
the Company deems proper and to the extent specified in such opinion, upon an
opinion or opinions (in form and substance satisfactory to counsel for the
Underwriters) of other counsel, acceptable to counsel for the Underwriters,
familiar with the applicable laws, in which case the opinion of counsel for the
Company shall state that the opinion or opinions of such other counsel are
satisfactory in scope, form, and substance to counsel for the Company and that
reliance thereon by counsel for the Company and the Underwriters is reasonable;
(B) as to matters of fact, to the extent they deem proper, on certificates of
responsible officers of the Company; and (C) to the extent they deem proper,
upon written statements of certificates of officers of departments of various
jurisdictions having custody of documents respecting the corporate existence or
good standing of the Company; provided that copies of any such opinions,
certificates, or statements shall be annexed as exhibits to the opinion of
counsel for the Company.
(c) On or prior to the Closing Date and any Additional Closing Date,
as the case may be, the Underwriters shall have been furnished such information,
documents, certificates, and opinions as they may reasonably require for the
purpose of enabling them to review the matters referred to in Section 7(b), and
in order to evidence the accuracy, completeness, or satisfaction of any of the
representations, warranties, covenants, agreements, or conditions herein
contained, or as the Underwriters may reasonably request.
(d) At the Closing Date or any Additional Closing Date, as the case
may be, (i) the Registration Statement and the Prospectus and any amendments or
supplements thereto shall contain all statements which are required to be stated
therein in accordance with the Securities Act and the Regulations, and in all
material respects conform to the requirements thereof; and neither the
Registration Statement nor the Prospectus nor any amendment or supplement
thereto shall contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make the
statements therein not misleading, (ii) there shall have been, since the
respective dates as of which information is given in the Registration Statement
and the Prospectus, no material adverse change, or any development involving a
prospective material adverse change, in the business, properties, or condition
(financial or otherwise), results of operations, future prospects, capital
stock, long-term or short-term debt, or general affairs of the Company from that
set forth in the Registration Statement and the Prospectus, except changes which
the Registration Statement and Prospectus indicate might occur after the date on
which the Registration Statement becomes effective under the Securities Act, and
the Company shall not have incurred any material liabilities or entered into any
agreements not in the ordinary course of business other than as referred to in
the Registration Statement
-25-
and Prospectus, (iii) except as set forth in the Prospectus, no litigation,
arbitration, claim, governmental or other proceeding (formal or informal), or
investigation shall be pending, threatened, or in prospect (or any basis
therefor) with respect to the Company, or any of its respective operations,
businesses, properties, or assets which would be required to be set forth in the
Registration Statement, wherein an unfavorable decision, ruling, or finding
would have a Material Adverse Effect, and (iv) the Stock shall be quoted upon
the Nasdaq National Market.
(e) At the Closing Date and any Additional Closing Date, as the case
may be, the Underwriters shall have received a certificate of the President and
the Chief Financial Officer of the Company, dated the Closing Date or such
Additional Closing Date, as the case may be, to the effect, among other things,
that (i) the conditions set forth in Sections 7(a) and 7(d) have been satisfied,
(ii) as of the date of this Agreement and as of the Closing Date or such
Additional Closing Date, as the case may be, the representations and warranties
of the Company contained herein were and are accurate and correct, and (iii) as
of the Closing Date or such Additional Closing Date, as the case may be, the
obligations to be performed by the Company hereunder on or prior to such time
have been fully performed.
(f) At the time this Agreement is executed and at the Closing Date
and any Additional Closing Date, as the case may be, the Representative shall
have received a letter, addressed to the Underwriters, and in form and substance
satisfactory to the Representative, with reproduced copies or signed consents
thereof for each of the Underwriters, from King Griffen & Xxxxxxx P.C.,
independent certified public accountants for the Company, dated the date of
delivery:
(i) confirming that they are, and during the period covered
by their report(s) included in the Registration Statement and the Prospectus
were, independent certified public accountants with respect to the Company and
Medica within the meaning of the Securities Act and the published Regulations;
(ii) stating that, in their opinion, the financial statements
and schedules of the Company and Medica included in the Registration Statement
examined by them comply in form in all material respects with the applicable
accounting requirements of the Securities Act and the related published rules
and regulations;
(iii) stating that they have performed, with respect to the
interim financial statements of the Company included in the Registration
Statement, the procedures set out in Statement on Auditing Standards No. 71
("SAS 71") for a review of interim financial information and providing the
report of King Griffen & Xxxxxxx P.C. as described in SAS 71 on the interim
financial statements of the Company;
(iv) stating that, on the basis of procedures (but not an
examination made in accordance with the generally accepted auditing standards)
consisting of a reading of the latest available unaudited interim financial
statements of the Company (with an indication of the date of the latest
available unaudited interim
-26-
financial statements), a reading of the latest available minutes of the
stockholders and Boards of Directors of the Company and committees of such Board
of Directors, inquires to certain officers and other employees of the Company
responsible for financial and accounting matters, and other specified procedures
and inquiries, nothing has come to their attention that caused them to believe
that: (A) the unaudited financial statements and schedules of the Company
included in the Registration Statement and Prospectus do not comply in form in
all material respects with the applicable accounting requirements of the
Securities Act and the Exchange Act and related published rules and regulations
under the Securities Act or the Exchange Act or are not fairly presented in
conformity with generally accepted accounting principles (except to the extent
that certain footnote disclosures regarding any stub period may have been
omitted in accordance with the applicable rules of the Commission under the
Exchange Act) applied on a basis consistent with that of the audited financial
statements appearing therein; (B) there was any change in the capital stock or
long-term debt of the Company or any decrease in the total current assets or
stockholders' equity of the Company as of the date of the latest available
monthly financial statements of the Company as of a specified date not more than
five business days prior to the date of such letter, each, as compared with the
amounts shown in the December 31, 1996 balance sheets included in the
Registration Statement and Prospectus, other than as described in the
Registration Statement and Prospectus or any change or decrease (which shall be
set forth therein) which, in the sole discretion of the Representative, the
Underwriters shall accept, or (C) there was any decrease in the revenues, net
income, or net income per share of Common Stock during the period from
December 31, 1996 to the date of the latest available monthly financial
statements of the Company or to a specified date not more than five business
days prior to the date of such letter, each as compared with the corresponding
prior period, other than as described in the Registration Statement and
Prospectus or any decrease (which shall be set forth therein) which, in the sole
discretion of the Representative, the Underwriters shall accept; and
(v) stating that they have compared specific numerical data and
financial information pertaining to the Company set forth in the Registration
Statement, which have been specified by the Representative prior to the date of
this Agreement, to the extent that such data and information may be derived from
the general accounting records of the Company, and excluding any questions
requiring any interpretation by legal counsel, with the results obtained from
the application of specified readings, inquiries, and other appropriate
procedures (which procedures do not constitute an examination in accordance with
the generally accepted auditing standards) set forth in the letter, and found
them to be in agreement.
(g) All proceedings taken in connection with the issuance, sale,
transfer, and delivery of the Securities shall be reasonably satisfactory in
form and substance to the Representative and to counsel for the Underwriters,
and the Underwriters shall have received from such counsel for the Underwriters
opinions, dated as of the Closing Date and the Additional Closing Date, as the
case may be, with respect to such of the
-27-
matters set forth under Section 7(b), and with respect to such other related
matters, as the Representative may reasonably request.
(h) The NASD, upon review of the terms of the public offering of the
Stock, shall not have objected to the Underwriters' participation in such
offering.
(i) On the Closing Date, the Company shall have sold the
Representative's Warrants to the Representative and its designees.
(j) Prior to or on the Closing Date, the Company shall have provided
to the Representative copies of the agreements referred to in Section 2(u) and
5(v). In order to enforce this covenant (with respect to Section 2(u)), the
Company shall impose stop-transfer instructions with respect to the shares of
capital stock owned by the officers, directors and stockholders until the end of
such period.
Any certificate or other document signed by any officer of the Company
and delivered to the Representative or to counsel for the Underwriters pursuant
to the terms of this Agreement shall be deemed a representation and warranty by
the Company, as applicable, hereunder to the Underwriters as to the statements
made therein. If any condition to the Underwriters' obligations hereunder to be
fulfilled prior to or at the Closing Date or any Additional Closing Date, as the
case may be, is not so fulfilled, the Representative may, on behalf of the
several Underwriters, terminate this Agreement or, if the Representative so
elects, in writing waive any such conditions which have not been fulfilled or
extend the time for their fulfillment.
8. INDEMNIFICATION AND CONTRIBUTION.
(a) Subject to the conditions set forth below, the Company agrees, to
indemnify and hold harmless each Underwriter, its officers, directors, partners,
employees, agents, and counsel, and each person, if any, who controls any
Underwriter within the meaning of Section 15 of the Securities Act or
Section 20(a) of the Exchange Act, against any and all loss, liability, claim,
damage, and expense whatsoever (which shall include, for all purposes of this
Section 8, but not be limited to, reasonable attorneys' fees and any and all
expense whatsoever incurred in investigating, preparing, or defending against
any litigation, commenced or threatened, or any claim whatsoever and any and all
amounts paid in settlement of any claim or litigation) as and when incurred
arising out of, based upon, or in connection with, (i) any untrue statement or
alleged untrue statement of a material fact contained in (A) the Registration
Statement, any Preliminary Prospectus, or the Prospectus (as from time to time
amended and supplemented), or any amendment or supplement thereto or (B) any
application or other document or communication (for purposes of this Section 8,
collectively referred to as an "application") executed by, or on behalf of, the
Company or based upon written information furnished by, or on behalf of, the
Company filed in any jurisdiction in order to qualify the Securities under the
"blue sky" or securities laws thereof or filed with the Commission or any
securities exchange; or any omission or alleged omission to state a material
fact required to be stated therein or necessary to make the statements
-28-
therein not misleading, unless such statement or omission was made in reliance
upon, and in conformity with, written information furnished to the Company as
stated in Section 8(b) with respect to any Underwriter by, or on behalf of, such
Underwriter through the Representative expressly for inclusion in the
Registration Statement, any Preliminary Prospectus or the Prospectus, or any
amendment or supplement thereto, or in any application, as the case may be, or
(ii) any breach of any representation, warranty, covenant, or agreement of the
Company contained in this Agreement; PROVIDED, that the Company will not be
liable to any Underwriter or any person controlling such Underwriter with
respect to any such untrue statement or omission made in any Preliminary
Prospectus that is corrected in the Prospectus (or any amendment or supplement
thereto) if the person asserting any such loss, claim, damage or liability
purchased Securities from such Underwriter but was not sent or given a copy of
the Prospectus (as amended or supplemented) at or prior to the written
confirmation of the sale of such Securities to such person in any case where
such delivery of the Prospectus (as amended or supplemented) is required by the
Securities Act, unless such failure to deliver the Prospectus (as amended or
supplemented) was a result of noncompliance by the Company with its obligations
under this Agreement. The foregoing agreement to indemnify shall be in addition
to any liability the Company may otherwise have, including liabilities arising
under this Agreement.
If any action is brought against an Underwriter or any of its
respective officers, directors, partners, employees, agents, or counsel, or any
controlling persons of an Underwriter (an "indemnified party") in respect of
which indemnity may be sought against the Company pursuant to the foregoing
paragraph, such indemnified party or parties shall promptly notify the Company
in writing of the institution of such action (but the failure so to notify shall
not relieve the Company from any liability they may have other than pursuant to
this Section 8(a)), and the Company shall promptly assume the defense of such
action, including, without limitation, the employment of counsel reasonably
satisfactory to such indemnified party or parties and payment of expenses. Such
indemnified party or parties shall have the right to employ its or their own
counsel in any such case, but the fees and expenses of such counsel shall be at
the expense of such indemnified party or parties unless the employment of such
counsel shall have been authorized in writing by the Company in connection with
the defense of such action or the Company shall not have promptly employed
counsel reasonably satisfactory to such indemnified party or parties to have
charge of the defense of such action or such indemnified party or parties shall
have reasonably concluded that there may be one or more legal defenses available
to it or them or to other indemnified parties which are different from, or in
addition to, those available to the Company in any of which events such fees and
expenses shall be borne by the Company and neither the Company shall not have
the right to direct the defense of such action on behalf of the indemnified
party or parties.
Anything in this Section to the contrary notwithstanding, the Company
shall not be liable for any settlement of any such claim or action effected
without its written consent, which consent shall not be unreasonably withheld.
The Company shall not, without the prior written consent of each indemnified
party that is not released
-29-
as described in this sentence, settle or compromise any action, or permit a
default or consent to the entry of judgment or otherwise seek to terminate any
pending or threatened action, in respect of which indemnity may be sought
hereunder (whether or not any indemnified party is a party thereto), unless such
settlement, compromise, consent, or termination includes an unconditional
release of each indemnified party from all liability in respect of such action.
The Company agrees promptly to notify the Underwriters of the commencement of
any litigation or proceedings against the Company or any of its officers or
directors in connection with the sale of the Securities, the Registration
Statement, any Preliminary Prospectus, or the Prospectus, or any amendment or
supplement thereto, or any application.
(b) Each Underwriter severally agrees to indemnify and hold harmless
the Company, each director of the Company, each officer of the Company who shall
have signed the Registration Statement, and each other person, if any, who
controls the Company within the meaning of Section 15 of the Securities Act or
Section 20(a) of the Exchange Act, to the same extent as the foregoing indemnity
from the Company to the Underwriters in Section 8(a), but only with respect to
statements or omissions, if any, made in the Registration Statement, any
Preliminary Prospectus, or the Prospectus (as from time to time amended and
supplemented), or any amendment or supplement thereto, or in any application, in
reliance upon, and in conformity with, written information furnished to the
Company as stated in this Section 8(b) with respect to any Underwriter by, or on
behalf of, such Underwriter through the Representative expressly for inclusion
in the Registration Statement, any Preliminary Prospectus or the Prospectus, or
any amendment or supplement thereto, or on any application, as the case may be
(it being agreed that the only such information is that set forth in the
stabilization legend on the inside front cover page of the Prospectus, the
amounts of the selling concession and reallowance and the name of the
Underwriters, and the number of shares of Firm Stock purchased by the
Underwriters set forth in the Prospectus), provided, however, that the
obligation of any Underwriter to provide indemnity under the provisions of this
Section 8(b) shall be limited to the amount which represents the product of (i)
the number of shares of Stock underwritten by such Underwriter hereunder and the
(ii) the underwriting discount per share of Common Stock set forth on the cover
page of the Prospectus. If any action shall be brought against the Company, or
any other person so indemnified based on the Registration Statement, any
Preliminary Prospectus or the Prospectus, or any amendment or supplement
thereto, or in any application, and in respect of which indemnity may be sought
against the Underwriters pursuant to this Section 8(b), the Underwriters shall
have the rights and duties given to the Company, and the Company, and each other
person so indemnified shall have the rights and duties given to the indemnified
parties, by the provisions of Section 8(a).
(c) To provide for just and equitable contribution, if (i) an
indemnified party makes a claim for indemnification pursuant to Section 8(a) or
8(b) (subject to the limitations thereof) but it is found in a final judicial
determination, not subject to further appeal, that such indemnification may not
be enforced in such case, even though this Agreement expressly provides for
indemnification in such case or (ii) any
-30-
indemnified or indemnifying party seeks contribution under the Securities Act,
the Exchange Act, or otherwise, then the Company (including for this purpose any
contribution made by, or on behalf of, any director of the Company, any officer
of the Company who signed the Registration Statement, and any controlling person
of the Company), as one entity, and the Underwriters (including for this purpose
any contribution by, or on behalf of, an indemnified party) as a second entity,
shall contribute to the losses, liabilities, claims, damages, and expenses
whatsoever to which any of them may be subject, based on relative benefits so
that the Underwriters are responsible for the proportion thereof equal to the
percentage which the underwriting discount per share of Common Stock set forth
on the cover page of the Prospectus represents of the initial public offering
price per share of Common Stock set forth on the cover page of the Prospectus
and the Company is responsible for the Company's proceeds, provided, however,
that if applicable law does not permit such allocation, then other relevant
equitable considerations such as the relative fault of the Company and the
Underwriters in connection with the facts which resulted in such losses,
liabilities, claims, damages, and expenses shall also be considered. The
relative fault, in the case of an untrue statement, alleged untrue statement,
omission, or alleged omission, shall be determined by, among other things,
whether such statement, alleged statement, omission, or alleged omission relates
to information supplied by the Company or by the Underwriters, and the parties'
relative intent, knowledge, access to information, and opportunity to correct or
prevent such statement, alleged statement, omission, or alleged omission. The
Company and the Underwriters agree that it would be unjust and inequitable if
the respective obligations of the Company and the Underwriters for contribution
were determined by pro rata or per capita allocation of the aggregate losses,
liabilities, claims, damages, and expenses (even if the Underwriters and the
other indemnified parties were treated as one entity for such purpose) or by any
other method of allocation that does not reflect the equitable considerations
referred to in this Section 8(c). No person guilty of a fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who is not guilty of such
fraudulent misrepresentation. For purposes of this Section 8(c), each person,
if any, who controls the Underwriters within the meaning of Section 15 of the
Securities Act or Section 20(a) of the Exchange Act and each officer, director,
partner, employee and agent of the Underwriters shall have the same rights to
contribution as the Underwriters, and each person, if any, who controls the
Company within the meaning of Section 15 of the Securities Act or Section 20(a)
of the Exchange Act, each officer of the Company who shall have signed the
Registration Statement, and each director of the Company shall have the same
rights to contribution as the Company, subject in each case to the provisions of
this Section 8(c). Anything in this Section 8(c) to the contrary
notwithstanding, no party shall be liable for contribution with respect to the
settlement of any claim or action effected without its written consent. This
Section 8(c) is intended to supersede any right to contribution under the
Securities Act, the Exchange Act, or otherwise.
9. REPRESENTATIONS AND AGREEMENTS TO SURVIVE DELIVERY. All
representations, warranties, covenants, and agreements contained in this
Agreement shall be deemed to be representations, warranties, covenants, and
agreements at the
-31-
Closing Date and any Additional Closing Date, and such representations,
warranties, covenants, and agreements of the Underwriters and the Company,
including the indemnity and contribution agreements contained in Section 8,
shall remain operative and in full force and effect regardless of any
investigation made by, or on behalf of, the Underwriters or any indemnified
person, or by, or on behalf of, the Company or any person or entity which is
entitled to be indemnified under Section 8(b), and shall survive termination of
this Agreement or the delivery of the Firm Stock and the Additional Stock, if
any, to the Underwriters. In addition, the provisions of Sections 6, 8, 9, 12,
and 14 shall survive termination of this Agreement, whether such termination
occurs before or after the Closing Date or any Additional Closing Date.
10. DEFAULT BY AN UNDERWRITER. If one or more of the Underwriters
shall fail or refuse at a Closing Date to purchase and pay for any of the Stock
agreed to be purchased by such Underwriter or Underwriters hereunder on such
date and the aggregate number of shares of Firm Stock or Additional Stock, as
the case may be, which such defaulting Underwriter or Underwriters, as the case
may be, agreed but failed or refused to purchase is not more than one-tenth of
the total number of shares of Firm Stock or Additional Stock, as the case may
be, to be purchased on such date by all Underwriters, each non-defaulting
Underwriter shall be obligated severally, in the proportion which the number of
shares of Firm Stock set forth opposite its name in Schedule I bears to the
total number of shares of Firm Stock which all the non-defaulting Underwriters,
as the case may be, have agreed to purchase, or in such other proportion as the
Representative may specify, to purchase the Firm Stock or Additional Stock, as
the case may be, which such defaulting Underwriter or Underwriters, as the case
may be, agreed but failed or refused to purchase on such date; PROVIDED that in
no event shall the number of shares of Firm Stock or Additional Stock, as the
case may be, which any Underwriter has agreed to purchase pursuant to Section 3
hereof be increased pursuant to this Section 10 by an amount in excess of
one-tenth of such number of shares of Firm Stock or Additional Stock, as the
case may be, without the written consent of such Underwriter. If on the Closing
Date or on the Additional Closing Date, as the case may be, any Underwriter or
Underwriters shall fail or refuse to purchase Firm Stock or Additional Stock, as
the case may be, and the aggregate number of shares of Firm Stock or Additional
Stock, as the case may be, with respect to which such default occurs is more
than one-tenth of the aggregate number of shares of Firm Stock or Additional
Stock, as the case may be, to be purchased on such date by all Underwriters in
the event of a default by an Underwriter and arrangements satisfactory to the
Representative and the Company for purchase of such shares of Firm Stock or
Additional Stock, as the case may be, are not made within 48 hours after such
default, this Agreement will terminate (except as provided in Section 9 hereof)
without liability on the part of any non-defaulting Underwriter and the Company,
except as otherwise provided in this Section 10. In any such case which does
not result in termination of this Agreement, either the Representative or the
Company shall have the right to postpone the Closing Date or the Additional
Closing Date, as the case may be, but in no event for longer than seven days, in
order that the required changes, if any, in the Registration Statement and the
Prospectus or any other documents or arrangements may be effected. Any action
taken under this paragraph shall not relieve
-32-
any defaulting Underwriter from liability in respect of any default of any such
Underwriter under this Agreement.
11. EFFECTIVE DATE OF THIS AGREEMENT AND TERMINATION THEREOF.
(a) This Agreement shall become effective at 9:30 A.M., New York City
local time, on the first full business day following the day on which the
Registration Statement becomes effective under the Securities Act or at the time
of the initial public offering by the Underwriters of the Firm Stock, whichever
is earlier. The time of the initial public offering shall mean the time, after
the Registration Statement becomes effective under the Securities Act, of the
release by the Underwriters for publication of the first newspaper advertisement
which is subsequently published relating to the Firm Stock or the time, after
the Registration Statement becomes effective under the Securities Act, when the
shares of Firm Stock are first released by the Underwriters for offering by the
Underwriters or dealers by letter or telegram, whichever shall first occur. The
Underwriters or the Company may prevent this Agreement from becoming effective
without liability of any party to any other party, except as noted below in this
Section 11, by giving the notice indicated in Section 11(d) before the time this
Agreement becomes effective under the Securities Act.
(b) If the purchase price of the Firm Stock has not been determined
as provided for in Section 3 prior to 4:30 p.m., New York City local time, on
the third full business day after the date on which the Registration Statement
was declared effective under the Securities Act, this Agreement may be
terminated at any time thereafter either by the Underwriters or by the Company
by giving notice to the other unless before such termination the purchase price
for the Firm Stock has been so determined. If the purchase price of the Firm
Stock has not been so determined prior to 4:30 p.m., New York City local time,
on the tenth full business day after the date on which the Registration
Statement was declared effective under the Securities Act, this Agreement shall
automatically terminate forthwith.
(c) In addition to the right to terminate this Agreement pursuant to
Sections 7 and 10 hereof, the Underwriters shall have the right to terminate
this Agreement at any time prior to the Closing Date or any Additional Closing
Date, as the case may be, by giving notice to the Company, and, if exercised,
the Over-allotment Option, at any time prior to any Additional Closing Date, by
giving notice to the Company, (i) if any domestic or international event, act,
or occurrence has materially and adversely disrupted, or, in the opinion of the
Representative will in the immediate future materially and adversely disrupt,
the securities markets; or (ii) if there shall have been a general suspension
of, or a general limitation on prices for, trading in securities on the New York
Stock Exchange, the American Stock Exchange or in the over-the-counter market;
or (iii) if there shall have been an outbreak or increase in the level of major
hostilities or other national or international calamity; or (iv) if a banking
moratorium has been declared by a United States; or (v) if there shall have been
a material interruption in the mail service or other means of communication
within the United States if such interruption materially impairs the ability of
the Underwriters
-33-
to offer the securities for sale or materially impairs the securities markets
generally; or (vi) if the Company shall have sustained a material loss by fire,
flood, accident, hurricane, earthquake, theft, sabotage, or other calamity or
malicious act, whether or not such loss shall have been insured, or from any
labor dispute or court or government action, order, or decree, which, in the
opinion of the Representative, such event materially impairs the ability of the
Underwriters to offer the securities for sale or materially impairs securities
markets generally and will make it inadvisable to proceed with the offering,
sale, or delivery of the Firm Stock or the Additional Stock, as the case may be;
or (vii) if any material governmental restrictions shall have been imposed on
trading in securities in general, which restrictions are not in effect on the
date hereof; or (ix) if there shall be passed by the Congress of the United
States or by any state legislature any act or measure, or adopted by any
governmental body or authoritative accounting institute or board, or any
governmental executive, any orders, rules, or regulations, which the
Representative believes likely to have a material adverse effect on the
business, financial condition, or financial statements of the Company or the
securities market generally; or (x) if there shall have been such material and
adverse change in the market for securities in general or in political,
financial, or economic conditions as in the judgment of the Representative makes
it inadvisable due to the material impact on the securities market generally to
proceed with the offering, sale, and delivery of the Firm Stock or the
Additional Stock, as the case may be, on the terms contemplated by the
Prospectus.
(d) If the Representative elects to prevent this Agreement from
becoming effective, as provided in this Section 11 or to terminate this
Agreement pursuant to Section 7 or Section 10 of this Agreement, the
Representative shall notify the Company promptly by telephone, telex, facsimile
or telegram, confirmed by letter. If, as so provided, the Company elects to
prevent this Agreement from becoming effective or to terminate this Agreement,
the Company shall notify the Representative promptly by telephone, telex,
facsimile or telegram, confirmed by letter.
(e) Notwithstanding any election hereunder or any termination of this
Agreement, and whether or not this Agreement is otherwise carried out, the
provisions of Sections 6, 8, 9, 13 and 14 shall not be in any way affected by
such election or termination or failure to carry out the terms of this Agreement
or any part hereof. Anything in this Agreement to the contrary notwithstanding
if this Agreement shall not become effective by reason of an election pursuant
to this Section 11 or if this Agreement shall terminate or shall otherwise not
be carried out within the time specified herein by reason of any failure on the
part of the Company to perform any covenant or agreement or satisfy any
condition of this Agreement required by it to be performed or satisfied, the
sole liability of the Company to the Underwriters, in addition to the
obligations the Company assumed pursuant to Section 6 hereof, will be to
reimburse the Underwriters for such out-of-pocket expenses (including the
reasonable fees and disbursements of their counsel) as shall have been incurred
by it in connection with this Agreement or the proposed offer, sale, and
delivery of the Securities, and, upon demand, the Company agrees to pay promptly
the full amount thereof to the Underwriters.
-34-
12. NOTICES. All communications hereunder, except as may be
otherwise specifically provided herein, shall be in writing and, if sent to any
Underwriter, shall be mailed, delivered, telexed, sent by facsimile or
telegraphed, confirmed by letter, to Hampshire Securities Corporation, 000 Xxxxx
Xxxxxx, 0xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xx. Xxxxxxx X. Xxxxxx,
Senior Managing Director, with a copy to Fulbright & Xxxxxxxx L.L.P., 000 Xxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxx Xxxxxx, Esq.; or if sent to
the Company, shall be mailed, delivered, telexed, sent by facsimile or
telegraphed, confirmed by letter, to the Company, 00000 Xxxxx Xxxxxxx
Xxxxxxxxxx, Xxxxxx, Xxxxx 00000, Attention: Xx X. Xxxxx, with a copy to Brock,
Fensterstock, Xxxxxxxxxxx, XxXxxxxxx & Xxxx LLC, Xxx Xxxxxxxx Xxxxxx, 00xx
Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxxxx Xxxxxx Xxxxx, Esq. All
notices hereunder shall be effective upon receipt by the party to which it is
addressed.
13. CONSTRUCTION. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of New York, without giving effect to
conflict of laws.
14. CONSENT TO JURISDICTION. The Company irrevocably consent to the
jurisdiction of the courts of the State of New York and of any federal court
located in such State in connection with any action or proceeding arising out
of, or relating to, this Agreement, any document or instrument delivered
pursuant to, in connection with, or simultaneously with this Agreement, or a
breach of this Agreement or any such document or instrument. In any such action
or proceeding, the Company waives personal service of any summons, complaint, or
other process and agrees that service thereof may be made in accordance with
Section 12 and upon itself at the address set forth in the Registration
Statement or such other address as such agent may designate by notice in
accordance with Section 12. Within 30 days after such service, or such other
time as may be mutually agreed upon in writing by the attorneys for the parties
to such action or proceeding, the Company shall appear or answer such summons,
complaint, or other process. Should the Company fail to appear or answer within
such 30-day period or such extended period, as the case may be, the Company
shall be deemed in default and judgment may be entered against the Company for
the amount as demanded in any summons, complaint, or other process so served.
-35-
If the foregoing correctly sets forth the understandings between the
Underwriters and the Company, please so indicate in the space provided below for
that purpose, whereupon this letter shall constitute a binding agreement between
us.
Very truly yours,
XXXXXXXXX.XXX INC.
By:_______________________________________
Name:
Title:
Accepted as of the date first above
written in New York, New York
HAMPSHIRE SECURITIES CORPORATION
By:________________________________________
Name:
Title:
On behalf of itself and the other several
Underwriters named in Schedule I hereto
SCHEDULE I
NUMBER OF SHARES OF
NAME FIRM STOCK
TO BE PURCHASED
Hampshire Securities Corporation . . . . . . . . . . .
_________
Total . . . . . . . . . . . . . . . . . . . . 2,700,000
---------
---------
